Admas University Of Postgraduate Studies
Department Of Project Management
Determinants Of The Performance Of Micro And Small Enterprises
In Addis Ababa, The Case Of Yeka Sub-city
By:
Moges Alemayehu
Academic advisor: Shewayirga Assalf (Asst,Prof)
Admas University
Addis Ababa, Ethiopia
June, 2021
Introduction
Literature Review
Methodology of The Study
Findings of the Study
Conclusions & Recommendations
1.Introduction
Background of the study
 Micro and small enterprises play a key role in economic growth
and industrial development of a country.
 It have become engines of poverty reduction ,employments
creation and development .
 It progressively being regarded as powerful engines for economic
performance and development of most economies(muzenda,2014).
 in Africa the MSEs sector provides certain benefits to the
economy. in Ethiopia micro and small enterprises play crucial role
for socio –economic. However ,their effectiveness depends on the
nature, performance, and productivity level of employment and
available resource.
 In developing countries the informal sector that mainly constitutes
microenterprises is the major source of employment and income
for the urban population. ILO (2000.
Cont..
 MSEs have also found to play a key role is working
premises/sheds manufacturing, construction sectors, ,urban
agriculture, Service rendering and trade .
 in Ethiopia, the definition of MSEs is differs among various
governmental organizations
 Development Agency and establishment Council of Minsters
Regulations No ‘33/1998 defines Micro and small enterprises as
“micro enterprises “or” Small Enterprises” businesses engaged in
commercial activities other than technological and consultancyservices, the criteria of which shall be determined in the directives
to be issued by the ministry.
 Micro enterprises are business activities that are independently
owned and operated, have small of the market, are managed by
the owner and employing five or less employees.
Statement of the problem
 There is a common consensus among developed and developing
countries that MSEs can become effective creators of
employment, innovation, and incomes.
 generation and can drive economic growth and thus play a crucial
role in fighting against poverty (Mesfin, 2015;Francis and Sedan,
2015)
 performance of MSEs depends on a number of factors which
includes; politico-legal factors, working places factors
technological factors infrastrural factors marketing factors
financial factors management factors entrepreneurial factors.
• the study has extended the determinants variables to the external
factors of access to market, access to training, government policies
and regulations, access to credit, and market competition and
internal factors.
Objectives of the study
General Research Objective
 The objective of this research was to examine the determinants of
the performance of Micro and Small Enterprises in Yeka Sub city
Specific research objectives
To investigate personal related of the performance of micro and
small enterprises in Addis Ababa Yeka sub city.
To examine business related of the performance of MSEs operating
in Addis Ababa Yeka sub city.
To determinants degrees of influence of main factors in
development of small scale of enterprise
To determinants factors affecting the performance of micro and
small enterprises.
Research Questions
This study Attempts to answer the following research
questions:
 Are major personal related factors significantly affecting the
performance of micro and small enterprises?
 Are major business related factors significantly affect the
performance of micro and small enterprises?
 Are degrees of influence of main factors in development of
small scale of enterprise?
 What are factors affecting the performance of micro and small
enterprises?
Significances of the Study
 Most importantly, the findings of this study are expected to
provide MSEs in Yeka sub-city an insight about the determinants
of the performance of MSEs, which help relevant stakeholders to
take appropriate measures,
2. Literature Review
Research Gaps
Few researches were studied in the areas of the Determinants Of
The Performance Of Micro And Small Enterprises Yet;
Most of their sample sizes were small,
Most of them were not clearly show the effects of reward, job
satisfaction and training on performance appraisal of employee,
Also there was a Methodological gap, time gap and geographical
gap observed.
Conceptual framework
Politico-legal factors
Working places factors
External
factors
Technological factors
Infrastructural factors
Marketing factors
Performance
of MSEs
Financial factors
Management factors
Entrepreneurial factors
Figure 1Conceptual frame works
Internal
factors
3. Research Methodology
• Research Design
Descriptive and Inferential
• Research Approach
Quantitative and qualitative
• Sources of Data
Primary Data and Secondary Data
• Sampling Technique
Simple random and purposive sampling
• Sample Size
480 employees
population
• Data Collection Tools
Questionnaires and field Observation
• Data Analysis
Descriptive statistics (Percentage& Narrative
explanation) and Inferential ( correlation &
regression)
• Data Processing instrument
SPSS version 23
• Data Presentation
Graphs, Tables and Texts
• Data Reliability
Chronbach’s alpha test (The study shows that
since the over all Cronbach’s alpha test result
was 0.961)
• Variable measurement
Regression model (Yi = a+β1X1 + β2X2 + β3
For large
4. Findings of the study
 Determinants of The Performance of Micro and Small
Enterprises were highly affected by:-
 Politico-legal factors
 Financial factors
 management factors
 marketing factors
 working place factors
 entrepreneurial factors
 infrastructure, factors and
 technology factors
 Pearson Correlation analysis
The Correlation between dependent and independent variable
Politico-legal Factors
Working factors
Technology factors
Infrastructure, Factors
marketing factors
Financial factors
management factors
Po .f
F. f
MF
Ma.F
W.F
E.f
1
.903**
.930
.196**
.908**
.938 .927**
.903**
1
.930
.908**
.196**
.908**
1
.178
.921**
.205
.940**
.178** .205** 1
.903**
1
.908**
.908**
.921**
.978** .940*
.927**
.899** .970**
.178
.187**
.196*
.921**
1
.927*
.879*
I..F
T.F
.912**
.899
.894**
.970**
.938**
.187**
.212*
.899
.894**
.196 .901*
.936**
*
.911*
*
.208*
*
.879*
*
.940*
*
1
.995**
The result reveals that there are positive correlations between
effects Politico-legal factors, technological factors (r= 0.903,
p<0.01), finacial factors (r = 0.930, p<0.01), enterprunal
factors (r= 0.196, p<0.01), working factors (r=0.908, p<0.01),
marketing factors (r = 0.927, p<0.01 and with infrastructure
factors (r=0.912, p<0.01).
Linear Regression Analysis Model summary
Model
R
R Square Adjusted R Square Std. Error of the Estimate
1
.971a
.942
.941
.158
a. Predictors: (Constant), Entereprenerurial factors, Management factors,
Working place factors, Marketing factors, Technological
factors,
Infrastructural factors,Financial Factors.
b. Dependent Variable: the determinant of performances of micro and small
enterprises.
The coefficient of multiple determinations (R) was estimated 0.985
and adjusted R2 value was0.97. This means that 97.5 percent of the
variation in the dependent variable is explained by the descriptive
variables included in the model. Furthermore, the adjusted R2 of 97.5
percent which is significant has further consolidated the goodness of
the model; hence, it is significance reliable.
 Coefficient table
Model
Unstandardized
Standardized
Coefficients
Coefficients
B
Beta
Std. Error
t
Sig.
(constant)
0.251
0.55
Politico-legalfactors
-.568
.045
.299
6.637
-.050
.029
-.050
-1.718
.169
.024
.172
6.965
Working place factors
Technological
factors
a. Dependent Variable: Effects on employee performance
4.598